For decades, financial planning has been considered a service that meets the needs of a generation that is now moving into retirement and beyond. The industry was built around traditional practices that met the needs of the largest generation in history: the baby boomers. In today’s market, a generational shift is already occurring that will demand change from the traditional practices of the financial industry. The challenge is meeting the needs of the now largest generation in human history: the Millennials.
First it is important to understand this growing demographic. Millennials are broadly considered to be the generation of people born from 1980 to the present day. This currently accounts for approximately 80 million people which surpasses the baby boomer generation of approximately 76 million. As the most educated generation, Millennials grew up during the technological boom and rely heavily on technology in their lifestyles. This generation tends to focus first on their careers and building a solid financial foundation by putting off major milestones like marriage (25% of adult Millennials) and starting a family (12% of adult Millennials). With a wealth of knowledge available at their fingertips, they crave instantaneous answers and attention.
As this generation continues to move into the workplace, there is a growing need for sound financial principles to address their goals and needs. The average Millennial comes out of college with $25,000 in student loan debt. Two thirds of Millennials describe themselves as “savers” while nearly 50% say they will begin retirement savings by the age of 30. A number of issues face this generation from employee benefit elections to home purchase opportunities and debt management. With a long-time horizon, Millennials can enjoy the power of compounding when dollars invested experience annualized growth from an early age.
As we usher in the Next Generation to the workforce, it is important for them to consider seeking sound financial advice. They can develop a debt strategy to retire debt and open up future cash flow. They can create budgeting and cash flow management to increase long-term savings. They can begin a systematic approach to saving for a down payment. Whatever their goals may be, by building a firm foundation early in their career, Millennials are taking one step closer to achieving their financial goals.
Source: The Gen-Savvy Financial Advisor by Cam Marston